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ConocoPhillips (COP - Analyst Report) has entered into a set of agreements with China's state-owned energy conglomerate, PetroChina Company Ltd. (PTR - Analyst Report). The agreements entail PetroChina to acquire stakes in 2 exploration assets in Western Australia. The companies also intend to jointly identify unconventional resource reserves in China.

In the first set of accords, ConocoPhillips will offload a 20% working interest in the Poseidon offshore discovery in the Browse Basin. The second set involves the divestment of a 29% working interest in the Goldwyer Shale, onshore Canning Basin, to PetroChina.

The closure of the deals is subject to the approval by the associates of ConocoPhillips. Upon successful completion, ConocoPhillips will operate the Greater Poseidon development, with a 40% stake and Melbourne-based Karoon Gas Australia holds the remaining 40% interest. This project includes blocks WA-315-P and WA-398-P.

In the Goldwyer shale, Perth-based New Standard Energy Ltd operates the license with a 25% stake. Following the stake sale, ConocoPhillips will retain a 46% interest.

The third deal allows ConocoPhillips as well as PetroChina to study the potential for unconventional resource development in the Neijiang-Dazu block in China’s Sichuan basin. The area covers approximately 500,000 acres. Following evaluation of the technical as well as commercial feasibility of the resource, both the energy giants aim to move into the development phase under a production-sharing contract.

In recent times, Chinese energy behemoths are increasingly investing overseas to meet the growing domestic energy demand. PetroChina recently acquired BHP Billiton Limited’s (BHP - Analyst Report) interests in the West Browse and East Browse LNG projects for $1.63 billion.

ConocoPhillips remains on track with major growth projects that are expected to offset production declines and diversify its asset portfolio. Furthermore, strong proceeds from asset sales, disposal of low-profit generating properties and cancellation of potentially less profitable projects add to the company’s growth efforts.

Recently, the oil major received the consent from the State Oceanic Administration (SOA) to start oil production at the Penglai 19-3 oilfield, off China's Northeastern coast.

ConocoPhillips retains a Zacks Rank #3 (short-term Hold rating), while PetroChina is supported by a Zacks Rank #5 (Strong Sell). However, there is another stock in the oil and gas industry, Total SA (TOT - Analyst Report), which holds a Zacks Rank #2 (Buy) and appears more attractive.

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